One-Two-Go Airlines could be the one to stop?

The Thai low cost carrier One-Two-Go Airlines is taking a long, hard look at the possibility of ceasing the budget carrier's flight operations in a damage-control exercise at a time of skyrocketing fuel prices and declining traffic demand.



Founder Udom Tantiprasongchai told the Bangkok Post that he was seriously pondering whether to ground One-Two-Go "temporarily" on mounting cost pressures and poor business outlook.

One-Two-Go is one of the three no-frills carriers in Thailand, all of which are struggling with fuel prices that have doubled in the past year to more than US$170 a barrel.

Nok Airlines, 39% owned by Thai Airways International, has been bleeding money but won a reprieve from shareholders to continue flying after the management committed to a rehabilitation package. This included lopping services, halving the fleet and cutting senior staff salaries. The carrier hopes to return to a break-even point over the next six months then turn a profit.

Meanwhile, Thai AirAsia is forgoing profit to keep seats filled. While it could be in the red again this year, chief executive Tassapon Bijleveld says he hopes its losses will be less than those of last year.

Udom's plans to suspend One-Two-Go was also influenced by a sense of betrayal from his two rivals, who a few weeks ago agreed to adopt a survival package but failed to follow through, says the Bangkok Post. It had been agreed that the trio would avoid price-cutting while increasing fuel surcharges, raising fares, cutting capacity and dropping low-traffic routes.

Udom said domestic fares needed to go up by 30%, and fuel surcharges would need to increase to better reflect prices. ''In this kind of environment, anyone can go (bust) any time,'' he said.

One-Two-Go has cut frequencies on several routes, with Bangkok-Chiang Mai and Bangkok-Phuket flights down to 21 a week from 28, Bangkok-Hat Yai halved to 7 a week, and services to Chiang Rai and Nakhon Si Thammarat cut from 7 to 2 a week.

While not ruling out retrenchments, Udom said he was considering the futures of the carrier's 700 employees in the case of a shutdown. Their options could include severance pay, leave without pay or training courses.

But he said the closure of One-Two-Go, which started flying in December 2003, might not be permanent. ''If the situation improves... we could be airborne again''.

Udom insisted that the parent carrier, Orient Thai Airlines, would keep flying, with chartered services and scheduled flights to Hong Kong and Incheon.

Orient Thai this year branched out into the freight arena by setting up Thailand's first dedicated cargo carrier, Orient Thai Cargo, using two used Boeing 747-200 acquired from Japan Airlines. It has also wet leased an aircraft to Sri Lankan.